U.S. natgas futures slump nearly 9% on demand concerns

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April 27 (Reuters) - U.S. natural gas futures dropped as much as 8.6% on Monday to their lowest in
over a week, as forecasts of milder weather coupled with coronavirus-led shutdowns weighed on demand.
One day ahead of the expiry date, front-month gas futures for May delivery on the New York
Mercantile Exchange fell 9.5 cents, or 5.4%, to $1.651 per million British thermal units at 10:25 a.m.
EDT (1425 GMT). Prices earlier dropped to their lowest since April 16 at $1.593.
"Natural gas is down as demand weakness seems to be overshadowing production cuts. The weather
outlook is in goldilocks-ville, not to hot and not too cold, just right for storage increases," said Phil
Flynn, senior analyst at Price Futures Group in Chicago.
Demand in the Lower 48 states, including exports, is expected to decline as the weather turns milder,
falling from 87 bcfd this week to 84.8 bcfd next, according to Refinitiv.
Meanwhile, oil prices slumped again on Monday on concerns over scarce storage capacity, especially in
the United States, and global economic doldrums from the coronavirus pandemic.
"Natural gas (is) succumbing to oil plunge with colder than previously expected Midwest temperatures
unable to offer much support," Jim Ritterbusch, president of Ritterbusch and Associates in Galena,
Illinois, said in a note.
Gas output in the Lower 48 states fell to a 11-week low of 91.7 bcfd on Thursday, and stood at 92.0
bcfd on Sunday, according to data provider Refinitiv.
Last week's report from the U.S. Energy Information Administration (EIA) showed utilities injected 43
billion cubic feet (bcf) of gas into storage during the week ended April 17. The increase boosted
stockpiles to 2.140 trillion cubic feet (tcf), 20.5% above the five-year average of 1.776 tcf for this
time of year.
Looking ahead, gas futures for the balance of 2020 and calendar 2021 were trading
higher than the front-month on expectations demand will jump as the economy snaps back once governments
loosen travel and work restrictions.
In the long-term, the EIA projected the reduction in drilling will cut gas production to an annual
average of 91.7 billion cubic feet per day (bcfd) in 2020 and 87.5 bcfd in 2021 from a record 92.2 bcfd
in 2019. That would be the first annual production decline since 2016 and the first time since 2005 that
output fell for two consecutive years.
Week ended Week ended Year ago Five-year
April April 17 April 24 average
24(Forecast) (Actual) April 24
U.S. natgas storage (bcf): +53 +43 +114 +74
Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days
Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year Norm
Norm
U.S. GFS HDDs 96 117 110 97 99
U.S. GFS CDDs 55 61 55 57 49
U.S. GFS TDDs 151 178 165 154 148
Refinitiv U.S. Weekly GFS Supply and Demand Forecasts
Prior Week Current Week Next Week This Week Five-Year
Last Year Average For
Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production 92.6 91.9 92.1 89.8 77.2
U.S. Imports from Canada 5.9 6.1 6.4 7.8 8.1
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1
Total U.S. Supply 98.5 98.0 98.5 97.6 85.4
U.S. Demand (bcfd)
U.S. Exports to Canada 2.4 2.7 2.5 2.7 2.3
U.S. Exports to Mexico 4.6 4.7 4.7 4.0 3.7
U.S. LNG Exports 8.1 7.6 8.1 5.1 1.8
U.S. Commercial 9.1 7.3 6.7 6.5 8.2
U.S. Residential 12.5 9.2 8.0 7.7 11.3
U.S. Power Plant 27.0 26.9 26.3 25.7 21.5
U.S. Industrial 22.7 22.1 21.9 21.8 23.0
U.S. Plant Fuel 4.6 4.5 4.5 4.6 4.6
U.S. Pipe Distribution 2.1 1.9 1.8 2.1 2.2
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 78.0 72.1 69.5 68.5 70.9
Total U.S. Demand 93.1 87.0 84.8 80.3 78.7
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub NG-W-HH-SNL 1.81 1.86
Transco Z6 New York NG-CG-NY-SNL 1.65 1.79
PG&E Citygate NG-CG-PGE-SNL 2.39 2.34
Dominion South NG-PCN-APP-SNL 1.58 1.67
Chicago Citygate NG-CG-CH-SNL 1.75 1.83
Algonquin Citygate NG-CG-BS-SNL 1.80 1.97
SoCal Citygate NG-SCL-CGT-SNL 1.52 1.80
Waha Hub NG-WAH-WTX-SNL 0.75 1.22
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England EL-PK-NPMS-SNL 21.50 22.50
PJM West EL-PK-PJMW-SNL 20.75 21.25
Ercot North EL-PK-ERTN-SNL 23.25 23.00
Mid C EL-PK-MIDC-SNL 12.17 17.48
Palo Verde EL-PK-PLVD-SNL 25.81 21.00
SP-15 EL-PK-SP15-SNL 22.75 21.75
(Reporting by Sumita Layek in Bengaluru; Editing by Steve Orlofsky)